How to Setup Credit Card Processing for Your Small Business

It is no secret that accepting credit cards is good for you business. It has been proven that moving away from a cash-only model can increase your average order sizes by as much as 40 percent.

With that being said, there is a lot of information and jargon out there about choosing the right provider, payment system as well as all the stressful bits like hidden costs and high equipment prices.

All of this can make small business owners reluctant to dip their toe into this revenue pool, but it is not as scary or complicated as you think.

Here’s a quick and simple guide on how to set up credit card processing small business owners.

Step 1: Learn The Jargon
Deciding to accept credit cards comes with learning a whole new vocabulary set. Here are some terms you need to be familiar with to make an informed decision about credit card processing solutions:

  • Merchant Bank: This is the financial institution that provides merchant account services to facilitate transactions.
  • Aggregators: An aggregator is a credit card processor like Paypal that processes credit card transactions but is not a financial institution.
  • Processor: A processor is a third party middleman that facilitates credit card transactions, merchant bank responsibilities and sends credit card information to the right payment networks and accounts.

Step 2: Understanding and Finding The Right Payment Option For Your Business Type

Depending on your business type and needs, you will need one or more of these payment options to accept credit cards and run your business smoothly.

Point-of-Sale (POS) Systems
A POS credit card system is ideal for small business that need more functions than just a basic credit card processing system. For example, a local coffee shop that has a high daily sales volume would benefit from a system that not only accepts payments but also integrates with existing accounting software, like QuickBooks to save time by tracking inventory and generating sales reports.

Credit Card Terminal
Credit card terminals for small business owners are ideal if you only process a few transactions a day.For example, if you own a small beauty salon and only process under 20 transactions a day, you just need the ability to accept credit or debit cards. You do not need all the bells and whistles of a full down POS system.

Mobile Credit Card Processor
Mobile credit card processing for small business owners is a great options for people who require more flexibility in where they can process payments.It is essentially an app on your smartphone or tablet that is combined with a device that lets you accept a credit card transaction from anywhere. Not only is it perfect for market or food vendors, but it is a great way for retail owners to reduce queue wait times by setting up mobile register points.

Online Credit Card Processors
An online credit card processor is ideal for merchants who are looking to sell their products and services directly from their website. It is essentially a third party company like PayPal that processes credit card transactions without the need for a merchant account.

Hybrid Payment Options
Of course, many small businesses choose to implement more than one type of credit card processor. For example, if you are in the hotel industry you may need an online processing system for clients to book and pay online as well as a terminal for customers who book upon arrival.

Whether you need a hybrid model or not all depends on your business needs and the payment options you want to have available for your customers.

Step 3: Finding The Right Credit Card Processor Merchant
Just like with any other product you are looking to buy, you can only get the best deal by doing some comparison shopping.

Some providers may advertise a lower rate, but have hidden fees or have poorer customer support. To help make sure you are getting the best possible deal without any nasty surprises,  ask the following questions:

  • What is the total rate with all fees included?
  • What costs are involved with regards to set-up, cancellation, statement, service and application fees?
  • What are the revenue requirements?
  • How long will it take to set-up?
  • What are the accepted payment types?
  • How helpful is their customer support?

It is always advised to compare at least three processors. This way you can have room to negotiate and see what fees you can get waived.

Moreover, before you sign a contract, don’t forget to search for the company on the Better Business Bureau to see if their rating as well if they have received any customer complaints.

Step 4: Consider Equipment Costs
Another factor that holds back small business owners accepting credit cards is equipment costs. While purchasing your own processing equipment will be cost-efficient in the long run, there are other ways around this high setup cost.

These days, many credit card processors let merchants lease a credit card terminal or POS system or offer free equipment as a sign-up bonus. This can be a great alternative to reduce start-up costs in the short-run if you do not need multiple stations.

Step 5: Review & Assess Your Provider
Now that you have chosen a credit card provider that suits your business needs and you are ready to start processing payments, it is important to put a reminder in your diary to reevaluate your provider.

Just like we audit our business operations, it is a good idea to periodically review your merchant provider to see if they are still meeting your needs or if someone else can offer you a better deal.

In short, setting up credit card processing for small business owners doesn’t need to be complicated. While choosing a credit card processor can be a bit of leg work, you will not regret accepting cards at your business. Not only will it boost sales, but it will give your customers a better experience and more options to spend with you.

Do your research, find a solution that meets your businesses needs and you will be well on your way to ringing up sales and growing your client base.

Photo by Bikerider London | Shutterstock

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